How to start an affiliate marketing business

Affiliate marketing could be a good option if you’re looking to start a low-cost and flexible business.

Affiliate marketing involves earning a commission from promoting other business’s products and services.

It’s a popular choice thanks to its potential profitability, scalability, and flexibility – the global affiliate marketing industry is set to grow to $15.7 billion by the end of 2024.

What is affiliate marketing?

Affiliate marketing is a performance-based marketing strategy in which an individual – an ‘affiliate’ – earns a commission for promoting a product or service belonging to another company, known as a ‘merchant’.

The affiliate promotes a product or service through their website or social media profile and earns a commission via pay-per-sale, pay-per-lead, or pay-per-click payment models.

• pay-per-sale is where an affiliate gets paid for each sale made by a customer that they have introduced or referred on to a business
• pay-per-lead is where an affiliate gets paid for each customer they introduce and that customer has their details captured, regardless of whether a sale is made
• pay-per-click is where an affiliate gets paid every time someone clicks a link from the affiliate to the company, irrespective of whether they become a lead or a customer.

Sales are tracked using affiliate links from one website to another, making it a beneficial, cost-effective strategy for businesses and marketers.

It appeals to people who are creating website content about an industry while generating revenue.

For example, a technology blog might include affiliate links to a company selling desktop PCs.

When visitors read a guide to choosing a desktop PC, that guide may include affiliate links to desktop PCs available from the merchant.

If a person clicks on an affiliate link and makes a purchase, the technology blog owner receives a commission.

How does affiliate marketing work?

Affiliate marketing runs on a commission-based structure.

You promote another company’s products or services as an affiliate on your website, blog, or social media platforms.

You earn a commission when a visitor clicks on the affiliate links you share and makes a purchase or shares their data as a lead.

This is how the process works:

Step 1 – Drawing up an affiliate agreement

You agree to promote a company’s product or service, and in exchange, the company gives you a unique affiliate link to track any sales from your platforms.

Step 2 – Promotion of products

You place the affiliate link on your platform, such as in blog posts, social media updates, emails, or other content.

Your task is to mention the product to your audience and encourage them to click the link.

Step 3 – Sending traffic to the merchant’s site

A visitor clicks on the affiliate link, which takes them to the merchant’s website.

If the visitor makes a purchase or becomes a lead, this is recorded from your link.

Step 4 – Receiving a commission

The merchant reviews and validates the transaction.

Once approved, you receive a commission for the sale.

Depending on what was agreed in your affiliate contract, this could be a flat fee, such as £10, or a percentage of the specific sale, such as 5% of the sale price.

Affiliate marketing creates a mutually beneficial relationship – the more effectively you promote a product and generate sales for a merchant, the more commission you can earn.

This business model allows you to make money by creating relevant content on your website and could provide an additional revenue stream without creating or delivering your own products or services.

The pros of affiliate marketing

Starting an affiliate marketing business has some key advantages::

Low start-up cost

You don’t need to create an original product or service to start an affiliate marketing business, making the start-up cost minimal.

The main requirement is a functional platform to promote affiliate products – this could be a website, blog, or social media account.

This could be your existing platform – such as an existing website that gets lots of visitors to its blog – or one you create especially for affiliate marketing purposes).

Flexibility

Affiliate marketing offers flexibility in terms of time and location, which means you can work from anywhere at any time.

Generate passive income

Once your promotional efforts are in place, you can earn an income even when you’re not actively working – one of the key benefits is the opportunity to earn a passive income.

The cons of affiliate marketing

Starting an affiliate marketing business also has some disadvantages, like any other business.

High competition

Affiliate marketing is highly competitive, and the most profitable niches can be oversaturated.

This means that it can be challenging to stand out and attract customers via your affiliate links.

Low commissions

Many affiliate programs offer a relatively low commission, meaning you may need to generate a high sales volume to earn a significant income.

Requires time and effort

Building an audience and generating consistent traffic to your platform could take time, so earning a substantial income through affiliate marketing can take a lot of effort and patience.

You depend on the merchant

An affiliate marketing business relies on the affiliate merchant’s ability to convert the traffic you send them into sales.

Any changes in their business strategy or commission structure could impact your earnings.

Getting started with affiliate marketing

Find a niche

Think about the best category to focus on to grow a successful affiliate marketing business.

Niches include travel, tech, health, fashion, pets, and online education.

Consider a niche that aligns with your interests and expertise and decide whether you want to go for a popular niche or something less competitive.

Remember, the most profitable niche will be something that your audience is genuinely interested in.

It’s a good idea to check your competitors to see what they promote and what strategies they use.

This can help you determine how to differentiate yourself and stand out from the crowd.

Decide on a content platform

Each content platform can work differently in affiliate marketing, so it’s important to decide on the right one for your business.

Choosing the right platform will depend on your chosen niche, target audience, and the type of content you’re comfortable creating.

While a website or blog could be a common choice for creating content that can attract relevant traffic, social media platforms such as Instagram, YouTube, or TikTok can also be effective, especially for visual or short-form content.

Create an affiliate website or channel

Once you’ve decided on the right niche and platform for your start-up, you can create your affiliate website or channel or use an existing platform.

If it’s a website or blog, you may want to choose a catchy name, maintain good design, and ensure it is built with best practices to attract as much traffic as possible.

For channels such as TikTok, Instagram, or YouTube, consider creating a compelling profile, engaging content, using relevant hashtags and developing a consistent posting schedule.

Regardless of your chosen platform, your goal should be to attract and retain a loyal audience for successful affiliate marketing.

Read our guide on how to build a website for your business.

Create great content

Creating high-quality, original content can make all the difference in affiliate marketing.

You might create product reviews, comparisons, lists, roundups, engaging tutorials, and how-to guides.

Whatever form your content takes, if it’s valuable, authentic, engaging, and trustworthy, it could attract and retain your audience.

Remember to comply with financial rules and legal requirements regarding affiliate content, including disclosing affiliate relationships.

Drive traffic to your affiliate site

You could attract traffic to your site using paid strategies – such as Google Ads or social media advertising – or organic search optimisation efforts.

Search Engine Optimisation (SEO) involves increasing the quantity and quality of traffic to your website through organic search engine results.

By optimising various elements of a website, including content and site structure, the goal is to improve its ranking on search engine results pages such as Google.

Paid strategies can generate immediate results, while organic SEO is a long-term strategy that builds sustainable traffic over time.

A balanced combination of both could help maximise the visibility of your affiliate site.

Read our guide on six ways to boost your website’s SEO.

Monitor and track your progress

If you want your affiliate marketing business to succeed, consider closely monitoring and tracking your campaigns.

Using analytics tools to track conversions can help you to understand audience preferences.

Regularly reviewing your data to determine what’s working and what needs improvement could increase your chances of success – and your commission.